AM Comments April 16 2025

Posted on Apr 16 at 07:04

Good morning. Ag markets are quiet/mixed to start Wednesday trade at the CBOT, with an overnight attempt at a sell-off having failed and prices now bouncing a bit to trade closer to unchanged. Looking at the big picture, we would expect another fairly choppy session in the space today, as the looming Easter holiday will act to curtail volume over the next two days and market-specific headlines remain somewhat absent. It continues to be all about trade and tariffs as far as most commodities are concerned, with an announcement on the proposed Chinse vessel port fee expected tomorrow; it is hoped for by US ag that the USTR will either delay the implementation of such measures or write the rule in such a way that outbound vessels loaded with US ag products would be exempt from the fees. If this is not the case, the move would be a major headwind for US ag exports, as increased costs would price our products out of most markets. Corn futures to start mid-week trading are unchanged to a penny higher, soybean futures are trading either side of unchanged, and the Chicago wheat market is 2-3 cents higher. Products are quiet/mixed, soybean meal is up 20 cents/ton, and soybean oil is down 5 points. Outside markets are also mixed, crude oil futures are up 50-60 cents/bbl, the Dow Jones index is down 40 points, and the US$ index is down 60 points; the S&P500 is down 40 points also, and the NASDAQ is down 260 points. Gold futures have shot out to new contract highs again and are up around $80-90/oz this morning.

 

Today's Reports: Monthly Retail Sales; EIA Weekly Ethanol Production/Energy Stocks

 

• This morning's weekly EIA ethanol production report for the week ending April 11th is expected to show production for the week in a range of 922k-1.050 mil bbls, while stocks are seen between 26.63-27.33 mil bbls. If the lower end of the production estimate is realized, this would be the lowest figure of this marketing year.

 

• Speaking to Reuters reporters on Tuesday, the Buenos Aires Grain Exchange's chief economist said that Argentine wheat production for the 2025/26 season, which is already forecast to be the second largest crop ever, could potentially rise even further if the government extends export tax cuts that are currently in place through the end of June. President Milei has previously expressed that the cuts would not be extended, but the country's ag sector has been pushing hard against this.

 

• In a memo on Tuesday, the USDA's Foreign Ag Service (FAS) said that they expected palm oil production in Indonesia to rise to 47 mil tons in the 2025/26 season, which would be up from 45.5 mil tons this year and also above the current official USDA forecast of 46.5 mil tons. Same group sees exports up slightly to 23 mil tons, while stocks are seen also increasing to 5.3 mil tons.

 

• According to data from China's National Bureau of Statistics, pork production in the country in Q1 2025 was up 1.2% from a year ago at 16.02 mmt's, while hog slaughter in the period was seen just 0.1% higher than last year at 194.76 mil head. Officials say production is expected to increase slightly from 2024, but added that the sector will likely remain under pressure due to oversupply and slow demand.

 

• The French Farm Ministry on Wednesday said they now see total soft wheat area in the coming season at 4.63 mil hectares, which is up around 10% from last year and also more than 1% above the five-year average. Planted area was down last year due to excessive rains and flooding early in the season, which caused farmers to cut back from expectations.

 

• Seemingly more confusion was created regarding the US-China trade war on Tuesday, as the White House announced new curbs on chip sales to China which appears to be in contrast to comments made by Trump that Nvidia specifically was going to be given the necessary permits to avoid the new measures in an expedited process. The news has the overall tech sector, which includes the NASDAQ, pacing the equity declines this morning.

 

• Other news regarding that situation, either directly or indirectly, included an order by Trump for an investigation into new tariffs on critical mineral imports, which are along the same lines as pharmaceutical and chip measures announced last week, and also headlines that China had appointed a new top trade negotiator, Li Chenggang, who is a former WTO representative. Lastly, Chinese GDP data for Q1 positively surprised to the upside at 5.4%, which could embolden them to take an even more hard-lined approach towards negotiations with the US in the short term.

 

• That said, sources familiar with the matter say China is open for negotiations, but wants to see a number of steps from the Trump administration before doing so; this includes showing more respect and reigning in hostile remarks from he and his cabinet members according to the source.

 

• Other financial market news over the next couple days is interest rate related, as economists see a cut from the Bank of Canada later this morning as possible but not likely, while the European Central Bank then is expected to trim its lending rate by another quarter percentage point on Thursday. Both countries saw relatively soft inflation data recently that would be reason enough to justify the cuts should they occur.

 

• On the weather front, there continues to be significant model differences on rainfall amounts/locations for the western/northern Corn Belt through the rest of this week and weekend; the EU is wetter through eastern NE/KS and also up into IA/MN, while the GFS sees a smaller band of heavy rains impacting an area further south and east through MO/IL/IN/OH. Note that the EU model also has heavier rains in this part of the region, but its the differences in the west and northwest, which are some of the direr areas in the US (excluding the Mexico border), that currently have our attention.

 

• Otherwise, there wasn't a lot of change elsewhere as extended forecasts into the end of the month continue to show generally warm and wet conditions for the eastern half of the country, and especially in the southeast. As far as planting goes, we find it a little early still to be overly concerned about too much moisture in mid-April, but should this forecast still be the same by the end of the month, chatter regarding prevent plant and acreage shifts will likely become more common.

 

• Still not a lot new for South America overnight, as rains returned to Brazil's growing regions on Tuesday and Argentina also caught some light showers south of Buenos Aires. Forecasts largely call for more of the same of this pattern the rest of this week and into next week, which as we've talked about the last few days, should be nearly ideal. Temperatures continue to trend warmer but are being accompanied by increasing moisture, which is keeping concern levels low.